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March 5, 2019, 12:32 p.m.

Luminary has $100 million, some top talent, and a mission to make you pay for podcasts. Can it pull it off?

All it’ll have to do is convince users to use a new app starting with no brand recognition, build exclusive programming that’s always pulling people in (and keeping them renewing), and do it all with VCs looking over their shoulders.

When he joined me on stage at Thursday’s Hot Pod Summit, Matt Sacks — CEO of Luminary, the forthcoming exclusives-driven podcast startup that aspires to be the oh-you-know-who of podcasts — couldn’t/wouldn’t say much in the way of specifics. But we ended up getting a lot of those Sunday night, when the much-talked-about company kicked off a soft launch and its first public-facing press push through a flashy New York Times writeup. Let’s go over the details.

1. A Luminary subscription will cost $8 a month — so, lower than the cheapest tier for Netflix and Audible ($8.99 and $14.95, respectively), but higher than Stitcher Premium ($4.99).

2. Despite the March press push (presumably timed for SXSW), the service isn’t expected to actually roll out until June. That’s pretty far away, and I’ve been told that it’s somewhat uncommon for a startup to exit stealth mode this before its actual launch. A curious choice.

3. The service will start off with more than 40 ad-free exclusive shows. The portfolio is a mix of pre-existing podcasts, new projects from existing publishers, and brand new productions. You can view some of those offerings on this page, but they include:

  • New shows from Adam Davidson (through his new studio, Arrow Productions), Guy Raz (on his own, separate from NPR), and Slow Burn co-creators Leon Neyfakh and Andrew Parsons (who weren’t able to bring the Slow Burn IP from Slate with them)
  • Projects from Jacob Weisberg and Malcolm Gladwell’s Pushkin Industries, Lena Dunham (via Pineapple Street), Topic Studios, and Alex Gibney’s Jigsaw Productions
  • Some Wondery shows, specifically Locked Up Abroad plus Hollywood & Crime
  • Stuff from digital media companies like New York Media, The Advocate, The Players’ Tribune, and The Ringer (which will supply three new “original shows”)
  • Two shows from WNYC Studios, Spooked and Note To Self (now a co-production between WNYC and Stable Genius Productions), which should theoretically raise the question of public radio, its mission, and a paid service like this
  • Love + Radio, which creator Nick van der Kolk is pulling away from the indie collective Radiotopia

Several folks have pointed out elsewhere that the lineup, as we see it now, doesn’t seem particularly diverse. And, perhaps more pressingly, it seems disproportionately stacked towards shows that already have followings or talent that’s developed a big name elsewhere. I’d need a more comprehensive list in order to assess the breakdowns along demographic lines and the ratios of established vs. upstart projects, but the murmuring here accentuates one of the podcast community’s core anxieties around Luminary or entities like it: Should the platform grow sufficient power to be able to actually pick winners and losers, what they fund — and what they don’t — really matters and strikes at the heart of podcasting’s celebrated openness.

4. This detail, which I first learned Thursday, was a surprise to me: On top of its subscription-driven exclusives business, Luminary will also be usable as a conventional podcast app that listeners can use to consume podcasts already out in the open. Previously, I’d assumed the platform would have a pure paywall. I guess I understand the broad logic: It’s easier to get people to pay for a ticket when they’re already gathered in the lobby. (A tortured metaphor, but you see what I’m trying to say.) But I suspect this might end up being a complicating factor, particularly when it comes to building a differentiating case for Luminary, whose model is essentially the same as Stitcher Premium, albeit with a significantly bigger war chest.

5. Finally, here’s the detail that strikes me as most astonishing: Luminary has apparently raised a total of $100 million in venture funding. This revelation comes almost a full year after The Wall Street Journal first reported the company’s $40 million raise in a round led by New Enterprise Associates (where Matt Sacks, 28, previously worked).

It also comes before — well before — the startup has converted a single paid user.

Worth further noting: The company currently employs around 70 people — 40 of which, according to the Times, are engineers, presumably well compensated, with offices in New York and Chicago. In other words, Luminary is a fairly expensive operation pre-launch — and that’s before we even start talking about how much the company must have committed to content deals, some of which, I imagine, must be quite costly, given expensive talent. (I have no special insight into this, but I’m guessing that Guy Raz alone is probably valued at a few ranch-style houses in the Midwest, given the ascent he’s on.)

Look, I’m just an average schmuck who knows little beyond basic personal finance principles — not spending more than you’re earning, so on and so forth — but the notion of a largely untested content-driven startup raising $100 million to shake up a consistently unwieldy ecosystem is something wildly distant from anything I’m able to wrap my head around. Sure, I’m aware that venture finance has its own universe that adheres to conventional logic as much as the bubble-world in Annihilation does adheres to actual Florida. But I have to say, I gulp at the level of risk involved in a situation where a consumer-facing media company has raised that much money before validating any of its hypotheses out in the wild.

Again, I don’t walk the venture/finance world, and I’m sure there are ~business reasons~ packed in there somewhere. And to be clear, I’m not saying that this won’t work. I’m not intellectually confident in saying that about anything, ever, until the end of time. I’m just saying that, given the details, Luminary has the feel of a wild, wild gamble.

Anyway, I stand by my initial analysis of the company’s principal challenge back in the spring of 2018: Within the context of podcasting — defined to this point by a wealth of free, ad-supported options — Luminary is in the business of consistently and perpetually beating that entire universe of free alternatives. But that doesn’t necessarily mean that the venture needs to provide better programming (however you define it) than all available alternatives in the open ecosystem. That is, it doesn’t have to be entrenched in the highly-volatile hits-making business. It could also mean provides a better overall experience for people interacting with the world of on-demand audio.

Judging from the press push, Luminary seems to be focused primarily on that first notion — framing its value proposition around the quality of its content. Here’s Sacks in the Times piece: “What sets Luminary apart is our exclusive content right off the bat. Nobody comes close.”

The tricky thing about “quality” is its subjectivity. To state the obvious: “Quality” means different things for different people. And, not to go all liberal arts college on you, the concept is tied to specific structural productions of status, prestige, social capital, taste, and power. (Perhaps relevant to this discussion is how Luminary chose to unveil itself: a flashy New York Times piece.) It’s one thing to build a “quality” product aimed at converting a specific group of people — say, certain segments of existing podcast listeners. But it’s another thing altogether when the expressed north star is literally Netflix, a subscription product that’s continuously growing off the fact that it’s well positioned to be most things to most (paying) people.

Ah, yes, the Netflix analogy. I’ve written before that I find the analogy troublesome. Not because “Netflix for X” is overused to the point of cliche, but because its evocation almost always underplays a crucial fact: Netflix didn’t build an initial sustainable user base off the strength of exclusives. It build that audience through film and television products that had already been tested in the marketplace, but were inefficiently monetized, insufficiently monetized, and/or hard for people to access.

To put it another way: Netflix’s early success was rooted in giving users products they already knew they wanted, that they were already habituated into paying for, and that had already gone through their own awareness-raising cycles — and then later layering a much harder exclusives strategy on top. That allowed them to expand into a different kind of business while being backed by the stability of the older one. Netflix’s original content journey was gradual.

In contrast, Luminary is tasked with a pure deadlift: They have to originate a new user behavior, develop a programming pipeline that both continuously converts more people into paid members and continuously convinces them to stay paid members, and do all of that a rate that outpaces their spend over time. Oh, and they’d have to do that beneath all the pressure a $100 million VC fundraise brings.

Anyway, back to the point about quality and subjectivity: The thing about the value proposition for something like Luminary is that it has to be specific enough to stick. What specifically about Luminary’s portfolio should convince me — a specific person with specific tastes — to pay $8 a month instead of turning to the enormous universe of free alternatives? Is Lena Dunham enough? Is Adam Davidson enough? Is Leon Neyfakh enough? Is this particular version of Guy Raz, who I can already hear on other still-active podcasts on other (free) platforms, enough? More to the point: Even if my answer to any of those questions is yes, will there be enough yeses for me to keep renewing my Luminary subscription after a few weeks? (Personally speaking, I’m not sure.)

Let’s reframe this line of questioning. Someone — I can’t remember who, if you recognize this let me know — once articulated that a subscription or membership business is not just a transaction; it’s an investment in continuous production. Hot Pod Insider subscribers give me $7 a month at least in part because you trust in my ability to continuously surface the stuff you’d like to consume. Will you trust in Luminary’s ability to develop stuff you’d want to consume? A related question: What is a Luminary show? What does it stand for?

Setting the notion of “quality” aside, I’m more comfortable thinking that Luminary will more likely live or die based on its marketing and user acquisition campaigns. With or without “best-in-class” inventory, it will persist only by successfully convincing actual human beings to become (and remain) paid subscribers for something a lot like what they can get for free. And this a more appropriate question for us to focus on is: How will they spend that $100 million (minus overhead and content deals) to do all that?

The Times made note of outdoor advertising targeting New York, Los Angeles, and Austin. Will Luminary napalm America with enough ads and billboards for Americans to reflexively equate the word Luminary with podcasts? Will we see an aggressive ground game operation in the vein of Skimmbassadors? Will Luminary’s PR team attempt to command the trades and the prestige press? Will it try to mint celebrities out of its signed talent? Will they ask their signed talents induce a halo effect to its platform by promoting it on Twit… — oh wait, that’s already happening. This, perhaps more than the content game, is Luminary’s principal front line.

A closing thought. Note that I haven’t argued whether Luminary is good or bad for podcasting. Frankly, I don’t know. For what it’s worth, I tend to be sympathetic to the view that the ecosystem needs paid options, if only to eat the risk for things like limited-run series and to provide creators with an alternative revenue source. Open podcasting that’s primarily ad-supported is important, but it has limits for certain types of shows and people. The key question in my mind is whether a paid platform can be executed in an equitable and sensible manner, and whether it can do so without triggering some sort of winner-takes-all dynamic. Whether that applies to Luminary, we shall see.

Two final notes on this story:

  • Some readers wrote in asking how I think this whole Luminary business will play out. Look, I might dabble with tarot readings, but obviously, I have no idea. There’s a possible future in which Luminary succeeds but becomes a stable home for a certain kind of show and doesn’t assume a kind of landlord power over podcasting. There’s also a possible future in which Luminary succeeds but does accumulate enough power to assume landlord status. There’s also a future in which Luminary doesn’t really work out and everybody there gets to fail upwards or whatever.
  • Readers also asked: Should they work with them? Look, that’s between you and your god. But if I was a smaller publisher who needed cash flow for whatever reason, I’d probably do it, because even if Luminary doesn’t work, it’s at the very least a wealth redistribution vehicle. Go get your money. I’d just make sure I’ve got other things going. Diversification, you know?

For the rest of this week’s Hot Pod, see here.

POSTED     March 5, 2019, 12:32 p.m.
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